What is the purpose of NACT?
The purpose of NACT is to provide a mechanism for franchisees to exert a positive influence on the larger organization to improve the services that we provide to our clients and the benefits that franchisees achieve. By joining the NACT you are making your voice heard in support of our vision to be a collaborative, unified front that can strengthen, promote, and foster the interests of franchisees of LearningRx. In addition, you have access to a broad range of member services designed to improve your business, provide access to legal and professional guidance, and boost your bottom line. The NACT is the preeminent gateway for information and support for anyone interested in building a successful LearningRx franchise business.
Who belongs to NACT?
All LearningRx franchisee owners are eligible and encouraged to join the NACT. As of June 2017, approximately 65% of LearningRx franchisee owners are members of the NACT. These members collectively represent about 68% of the LearningRx centers in operation.
Why do franchisees need a franchisee association such as the NACT?
Creating Win-Win Situations
The best use of an Association is to create win-win situations through better communication and understanding. With just two parties talking (i.e., the franchisor and an association representing the franchisees), it is much easier for each side to understand and appreciate the other’s positions. Better communication and understanding unquestionably make win-win results a much more positive outcome.
Likewise, an Association creates a stage for the franchisees to discuss and debate the issues they face. This allows them to make more informed and better-understood decisions. This in turn leads to better, more well-reasoned positions that are more likely to have a favorable reception from the franchisor.
Associations also provide a great educational resource for franchisees to improve their businesses. Successful franchisees in a system are an excellent source of information and knowledge for a struggling or new franchisee. Yet this superb resource is often overlooked or hard to access. An Association is a perfect tool for setting up and hosting educational programs at which successful franchisees can advise other franchisees needing assistance.
Likewise, Associations can be a great resource for general education. Instead of each franchisee spending valuable resources investigating the best new technologies or business practices, an association can research this for the entire system. This creates an economy of scale that greatly reduces the time and energy individual franchisees have to put into learning the newest and best technical advances for their system. Thus, instead of spending time trying to figure out how to keep ahead of the competition, they can spend time actually doing it.
In some systems, franchisees can greatly increase their buying power by creating national or regional purchasing cooperatives to negotiate lower prices for goods and distribution agreements. Thus an Association can increase its members’ profit margins by lowering their operating costs.
Level The Playing Field
One of the most compelling reasons for forming an Independent Franchisee Association is that it can help level the playing field between the franchisor and its franchisees.
Franchisors are usually more sophisticated and have considerably more financial power than their franchisees. Except for some large multi-unit operators, franchisees are more often than not single owners, family businesses or small partnerships. These typical franchisees often don’t have the time, leverage, financial wherewithal, or sophistication to meaningfully negotiate with their franchisor. This can result in a daunting situation where the franchisee’s life investment is at risk but they cannot afford to do battle with the franchisor and its high priced lawyers. The result is that even though the Franchisor might not have the stronger legal position, it often has the means to wear down the franchisee by simply outspending or out-litigating it. In short, most franchisees come into every interaction with the franchisor as a David facing Goliath.
An Independent Franchisee Association helps level the playing field by maximizing the franchisees’ bargaining power and giving them substantially more leverage in negotiations. This significantly increases the potential for positive results. For instance, a single franchisee by itself cannot generally match a franchisor’s budget – but when the whole system pools its resources, the disparity is greatly reduced. Even a protracted legal battle is easier to stomach when each franchisee is paying just a small percentage of the bill.
Similarly, speaking with one collective voice is generally much more effective. First, it centers the issues by narrowing their focus. Unless the franchisees’ position is clear, legally supported, or put forward with some type of leverage, they will not generally receive a favorable response from the franchisor. Second, a collective voice shows the franchisor that the issue has broad support and it is not just dealing with a squeaky wheel. A franchisor approached by a single franchisee or even a small percentage of the system is not likely to be receptive to any significant changes. Indeed, it may be tempted to squash the effort as an example. This is especially true when the rest of the system is silent. On the other hand, when the franchisees reach an organized consensus, it is much more difficult for the franchisor to ignore well-stated demands.
To appreciate the need for a level playing field, it is important to understand why franchisors take positions that are at odds with their franchisees. Franchisors’ strategies which reduce franchisees’ income are often rather shortsighted. Together, the franchisor and franchisees are generally better served by a long-term plan that maximizes profits for both. A business plan that benefits the system as a whole is almost always a better strategy than one that simply provides a short-term profit for the franchisor.
Independent Franchisee Associations, regardless of the particularities of their systems, will find they face many similar issues. The common thread however, is that by forming an association, the whole is made stronger than its parts.
The preceding excerpts referenced above were written by Singler, Napell & Dillon, LLP, a Guide to Forming An Independent Franchisee Association, Sebastopol, CA. (707)823-8719. www.singler-law.com.
Are there NACT events I can attend to gather information and learn more?
NACT holds an annual meeting for all members the day prior to the Learning Rx Convention. See the section on Annual Meeting for further details.